Rebecca And Her Husband Are Struggling to Keep The Business Going

My husband and I own our own business but have been struggling lately. I work a 9-5 job while he stays at home to run the business. We owe a lot of debt in credit cards from working to get the business up and going – and we’re just a few hundred dollars a month from breaking even.

It’s so frustrating! So we rely on the credit cards to keep us a float for the time being, which I hate. We already owe almost $19,000 in credit card debt.

Is the government going to intervene with the way the credit card companies are gouging interest rates? The banks (Citi in particular) are getting bailouts with our tax money and then turning around and raising our interest rates. I can barely afford my minimum payments as it is.

If they keep doing this to me I’m going to have to declare bankruptcy. I’ve had 3 cards already tell me they’re raising my APR to a MINIMUM of 19.99% or more by February. The government is quick to help the big companies, but what about the small businesses? What are we to do?

Rebecca”

The Answer

Dear Rebecca,

Sadly your situation is not all that unusual. A bit of the perfect storm I guess. You’ve just happened to start a business and financed part of it on credit cards at a time when the economy has fallen apart and lenders are freaking out.

The reason that your credit card companies are raising your rates is because they can. As long as you carry a balance on those cards you will be subject to whatever your creditors choose to give you. But there is a potential solution here.

If you don’t wish to accept the new terms and conditions the term update will give you instructions about what to do to opt out. Generally this will mean that your account will be closed and you will no longer have access to the card and it will show as closed on your credit report, potentially lowering your credit score as you move forward.

There is nothing on the table about any sort of government intervention. Government resists intervening to help consumers and in fact has done just the opposite. They government recently announced that they wish to make it easier for consumer lenders and credit card companies to get access to money to lend but there has been not a single peep about giving consumers any new rights or legislation to help them deal with problem credit card debt.

No bailouts of funds have been tied to the way the bank treats their customers or operates. I’m afraid there will be no lifeline coming for you from the federal government.

Your situation just reinforces what I have seen for years, banks do things that lead more people into failure than success. They have policies in place that force people into bankruptcy and then the banks get little back and blame the consumer for being casual or careless with credit.

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